Analyst Meet / AGM     19-Apr-24
Conference Call
HDFC Life Insurance Company
Expects to grow in line with private life insurance sector, keep VNB growth similar to APE growth

HDFC Life Insurance Company conducted a conference call on 18 April 2024 to discuss the financial results for the quarter ended March 2024. Vibha Padalkar, MD & CEO of the company addressed the call:


The company has delivered a healthy growth of 20% for Q4FY24 after adjusting for the one-off business of Rs 1000 crore in March 2023, despite the budget changes impacting high ticket sized business in FY24.

The aspiration of a double-digit growth for the full year was achieved with a 11% growth for FY24, on a normalized basis.

An individual APE grew 1% on an unadjusted basis in FY24. Renewal collections surged 18%. Persistency for the 13th month and 61st month was 87% and 53% respectively.

FY24 has been another landmark year for product launches, fuelled by relentless innovation and a desire to help meet customers evolving requirements.

New business margins were 26.3% in FY24.

Value of new business was Rs 3501 crore, implying a 2 year CAGR of 14%.

Embedded value stands at Rs 47468 crore end March 2024, with an operating return on embedded value of 17.5%.

The net profit of the company has increased 15% to Rs 1569 crore, fuelled by 18% increase in profit emergence from back book.

Solvency continues to be healthy at 187%.

During the first 11 months, the company has grown faster than the overall industry growth of 9%. The private market shares stood 15.4% and the company maintained position amongst the top three life insurers across individual and group businesses.

The company has established a sustainable foundation for FY25 through targeted initiatives aimed at key growth metrics.

Growth momentum continued across ticket sizes up to Rs 5 lakh with robust growth of over 22% in Q4 and 19% for full FY2024.

Tier 2 and 3 markets recorded a growth of 13% against overall company growth of 1%.

In line with intent to broaden the customer base, the number of policies increased by 11% which is almost 3X overall industry growth. The company insured 6.6 crore lives during FY24.

More than 70% of the retail customers on boarded are new to the company and almost half of these are below the age of 35 years.

Sum assured witnessed robust growth of 47% aided by growth in pure term, return of premium, high protection cover embedded in savings products and riders.

With product innovation across product segments, average sum assured per policy has increased by 33% on overall basis and 39% for savings business.

Annuity and protection put together contributed nearly half of overall new business premium in FY24.

Retail protection grew by 27% based on individual APE and the company believes that the momentum will sustain into FY2025.

The credit protect recorded 13% growth in spite of a cautious lending environment in H2 and increased competitive intensity in certain segments. The company continues to be a market leader in this segment.

The company remains optimistic about the growth potential of the annuity segment in India, considering its nascent stage and believes that the long-term opportunity remains promising.

The company will continue to pursue a balanced approach to growth by enhancing product offerings and maintaining pricing discipline.

The company maintained a healthy balance in terms of product mix with unit linked policies at 35%, non-par savings at 30%, participating products at 23%, retail term at 5% and annuity at 6%.

Unit link products continue to see a strong traction driven by buoyant equity markets.

New business margins declined to 26.3% in FY24 from 27 .6% in FY23. Of this drop of 130 basis points, about 70 basis points was on account of the operating leverage gap caused by the Rs 1000 crore additional APE received in FY23 due to the budget changes and 40 basis points was due to higher unit link proportion in FY2024.

The current business mix sets a strong platform for the company to continue delivering strong top Line and VNB growth in FY25 and beyond. The company expects VNB growth similar to APE growth.

The focus is on further enhancing presence across geographies and customer segments and maximizing the potential of distribution channels.

The company added 80,000 agents, while opened 75 new branches in FY24 and anticipate presence to exceed 600 touch points in FY25.

If the company sees significant incremental growth opportunities, the company will be flexible to trade-off margins while maximizing VNB growth.

The company anticipates a shift in 13- month persistency going forward influenced by product mix. The company is committed to maintaining persistency levels across all relevant cohorts.

The bancassurance channel has grown 17% in FY2024. HDFC Bank counter share continues to trend well to 63% as against 56% in last year. The company will continue to make further inroads in HDFC Bank share and that should grow faster than company level growth.

The company would be prioritizing VNB growth to build profitable business in the long run.

Historically the private sector has grown in the range of 12 to 15%, so the company should grow at least by that if not a shade higher than that.

The company aims to maintained return on embedded value in the range of 17-18%.

The subsidiary- HDFC Pension Management Company has achieved a milestone by crossing the AUM of Rs 75000 crore, showcasing a remarkable growth of 70%. The company has maintained market leadership in the pension category commanding a market share of 43%.

The company is actively advancing expansion plan for the GIFT City business with the introduction of innovative US dollar denominated life and health insurance products. It is already making strides in penetrating the NRI segment.
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